(This is an excerpt from an article I originally published on Seeking Alpha on April 2, 2012. Click here to read the entire piece.)
In January of this year, Adam Posen, External Member of the Monetary Policy Committee, Bank of England, gave a talk titled “What the return of 19th century economics means for 21st century geopolitics.” The title caught my interest because what little I know of 19th century economics is now dominated by the parallels drawn between the various panics in the late 19th century and the panic of 2008-2009. {snip}
As it turned out, Posen specifically looks at the years 1870-1910 to find likely lessons for the next 10-20 years. Posen notes that today’s relative scale of globalization and cross-border economic integration resembles the 1870-1910 period. Moreover, the apparent shifting of economic dominance and power from the aging (mostly Western) economies to the rapidly growing emerging economies, now accelerated by the current financial crisis and large sovereign debts, has many similarities with the transition in power from the United Kingdom to the U.S. Posen carefully draws one distinction by noting the earlier transition represented a transfer of power from one hegemonic power to another hegemony whereas today’s shift is more akin to the establishment of a multipolar economic regime where global incomes converge… {snip}
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on April 2, 2012. Click here to read the entire piece.)
Full disclosure: long SDS shares and SSO calls; long TBT